Author: Paul Wallbank

Paul Wallbank is a speaker and writer charting how technology is changing society and business. Paul has four regular technology advice radio programs on ABC, a weekly column on the smartcompany.com.au website and has published seven books.

When disruption meets regulation

Innovation wasn’t meant to be easy, particularly when you’re against vested interests.

Taxi booking applications have been one of the big areas for smartphone developers. Around the world apps for hailing cabs have popped up following the lead of San Francisco’s Uber.

One of the opportunities for copycat developers is that in most places taxis are regulated by the local city or state government, so an app for New York will struggle in Los Angeles, Paris or Tokyo and savvy entrepreneurs can create their own Uber knock off suited to their own location.

The problem is in most places taxis are regulated as a cartel, not a public service. Sometimes that cartel is to protect drivers, sometimes the companies that run the networks and often taxi license holders.

Sydney, Australia, is a good example of the latter two. The New South Wales state government’s rules are designed to protect the interests of the greedy ‘investors’ who’ve bought taxi license plates and the networks who run the booking systems and management of the cabs.

The result is Sydney cab drivers are treated like serf in what can only described as a feudal system while customers have to put up with lost bookings, poorly kept vehicles and high taxi fares.

It’s a lousy deal all round and is a great example of where disruption can change things for the better.

The problem is the incumbents will fight innovation that threatens their cosy and profitable arrangements and the regulators are part of that comfortable alliance.

In New York it looks like the Taxi and Limousine Commissioner does have some of the consumer interests at heart, pointing out that the metered fare is what passengers have to be charged by law. In most cities though, particularly Sydney, protecting the passenger is just another smokescreen for protecting vested interests.

Something that many innovators don’t realise is the power of those vested interests.

In the case of the taxi app developers many of them are about to get a nasty taste of just how vicious incumbent and their tame regulators can be when confronted with a threat to their cosy business arrangements.

Moving on from the gadget era

Amazon reinvent their business to suit changing economic times

Yesterday at the launch of the next generation of Kindle e-readers Amazon’s CEO Jeff Bezos observed why the various Google Android based tablets have failed.

Why? Because they’re gadgets, and people don’t want gadgets anymore. They want services that improve over time. They want services that improve every day, every week, and every month.

Throughout the industrial revolution progress and innovation was about creating products that improved people’s lives – whether it was Josiah Wedgwood making affordable crockery, Thomas Edison commercialising the light bulb or Henry Ford making cheap motor cars available to the masses – these innovations changed the way we lived or did business.

In the late Twentieth Century business focused more on creating gadgets and our lives became a race to accumulate more useless tat to store in our big McMansions to store the junk in.

We wore out our credit cards and home equity in “buying stuff we don’t need to impress people we don’t like” throughout the 1990s and early 2000s.

Today that’s changed, consumers are now more cautious and, despite the efforts of governments to prop up the broken system, the great credit boom is over.

Jeff Bezos is onto this, instead of Amazon offering me-too products that don’t add value,  “people don’t want gadgets anymore. They want services that improve over time.”

The word ‘service’ is notable — one of the things Amazon have achieved is changing how customers use books and DVDs from outright purchases that they can trade and sell to licensed products where Amazon and publishers control distribution.

Amazon are consolidating their position as one of the big four Internet empires. How Google, Apple and PayPal respond to Amazon’s suite of services will define much of the online economy.

Signing off voicemail

Voicemail’s decline is a symptom of the telecommunication industry’s shrivelling profits.

A survey by US phone company Vonage reports cellphone users are ditching voicemail and moving to alternatives.

Messages left on user accounts in July fell 8% while retrievals fell 14% compared to last year.

While those figures may have something to do with the billing practices of US carriers, it shows a much bigger trend in the telecommunications sector away from products which have been very profitable over the last two decades.

Voicemail, like SMS text messaging, has been a lucrative earner for telcos since the arrival of mobile phones.

Users get billed for calling a number then for leaving a message – often with a few delaying menu items to make sure callers get hit with a couple of billing units. In turn the receiver is charged for being notified they have a message, billed again for retrieving it and then pays a monthly fee for the privilege for all of this.

Five bites of the cherry for one phone call – nice work if you can get it.

This entire revenue stream is now dwindling as customers start using Internet based services to send messages. While the telcos charge extortionate rates for mobile data it is still far cheaper per message than the alternatives.

In many ways the profits from voicemail and SMS were a classic transition effect – a profitable window of opportunity opened for a short period when a new technology was introduced. Now those windows are closing.

For telcos, they have to find some profitable new channels. Even if they achieve their dreams of becoming media distributors or even content creators they’ll find both of those fields are far less lucrative than the mobile phone networks of a decade ago.

While telephone companies aren’t going to grow broke soon, today’s data networks aren’t the golden goose many people expect from telcos.

The smart telcos will adapt and survive, the ones who think the good times of a decade ago are coming back soon are in for a miserable future.

Nightlife Computers: Sockpuppets, trolls and fakes

Can you trust what is written on Facebook or online review sites and what are the responsibilities for business on social media sites?

Paul Wallbank joined Tony Delroy for the 6 September 2012 ABC Nightlife technology spot to discuss sock puppets, what they mean on review sites and what this means for businesses using social media as a marketing tool.

If you missed the program, you can listen to the podcast from the Tony Delroy’s Nightlife page.

This week’s sock puppet scandal puts the light on authors’ book reviews on sites like Amazon while other review services like TripAdvisor, Yelp and Urbanspoon continue to struggle with figuring out which reviews are real.

Businesses also have to worry about what people are posting in light of the recent Advertising Standards and ACCC rulings making businesses more accountable with what’s posted on Facebook.

Some of the questions we’ll look at include;

Join us from 10pm, Australian Eastern Time on Thursday September 5 on your local ABC radio station or listen online through their streaming service at www.abc.net.au/nightlife.

We’d love to hear your views so join the conversation with your on-air questions, ideas or comments; phone in on the night on 1300 800 222 within Australia or +61 2 8333 1000 from outside Australia.

You can SMS Nightlife’s talkback on 19922702, or through twitter to @paulwallbank using the #abcnightlife hashtag or visit the Nightlife Facebook page.

Freebies and rorts

Should writers, bloggers and journalists be accepting free travel and accommodation.

Something went badly wrong in Samsung’s PR department last month as their strategy of engaging bloggers turned into a series of embarrassing arguments over control.

First, a pair of Indian bloggers found themselves stranded at Berlin’s IFA 2012 fair after arguing with Samsung then French blogger France Quiqueré told of her similar encounter with Samsung’s control freakery at the London Olympics.

Both encounters raise the issue of what is expected when a journalist or blogger is given a free trip to a conference or event.

Freebies are always a difficult issue, the blogger or journalist is always going to be in a conflicted position and the organisation paying the bills has an interest in what they report.

In an ideal world, we’d all follow Sarah Lacy’s example where no-one accepts freebies. The problem with that is that most media companies, let alone bloggers, don’t have the funds to attend high priced conferences in their own cities and going to one half way across the world is out of the question if someone else doesn’t pay.

Sarah’s journalist model works fine when you have a well funded operation like Pando Daily’s VC investors or someone prepared to work for nothing – the digital sharecropper model.

With the collapse of newspaper revenues, most media companies long ago gave up their ethical objections to accepting paid trips to conferences – in sections like travel, tech and motoring the freebie has been well established for decades.

Basically, if event organisers didn’t pay the bills for journalists and bloggers their conferences or product launches won’t get much media attention because most of the reporters simply couldn’t afford to attend.

This is simple economics and where disclosure comes in. If a blogger or reporter has been given free travel or accommodation so they could attend an event then readers should be told.

What really matters in all of this are the audience and the reporter’s ethical compass. If the readers or viewers can trust and value what reporters produce and in turn the reporters are comfortable within their own moral boundaries then everyone is a winner.

The danger is getting the balance wrong. If readers lose trust, PR people start taking liberties (as Samsung tried to do) or bloggers and journalists are uncomfortable with what they do then it’s time to stop doing it.

One quick way to destroy credibility is for PR managers to expect those blogger to act like performing monkeys in return for ‘winning’ a competition or believing that ferrying a journalist to an event will guarantee fawning coverage.

Any decent journalist or blogger who respects themselves and their audiences won’t do that, if only because it will damage their brand or career prospects. This is the lesson Samsung have learned.

For the record, I do accept freebies and disclose them at the bottom of any related blog posts. If an investor would like to bankroll a down under Pando Daily, you know where to contact me.

Goodbye to the electronics store

As the economy and society change, the era of the big box retail store is coming to an end.

“Can Electronics Stores Survive?” asks the Wall Street Journal.

The future doesn’t look good with the liquidation of Circuit City in the United States and the exit of Australian giant Harvey Norman from the electronics markets.

Yet Apple Stores are growing and while it’s tempting to dismiss their sales training as brainwashing the truth is their staff are among the most profitable retail employees on the planet.

The real problem is the Big Box category killer store featuring wide product lines but poorly trained staff motivated only by commissions is a business model whose time has passed.

Customers can now go online, research website that are far more informative and honest than the staff at the megastore then get the appliance delivered and often installed for less than the shelf price at the mall.

The earliest industry this has affected is the computer sector – long ago companies like Dell and Gateway changed how people shopped for PCs.

Given the economics, it’s surprising the low margin big box stores survived as long as they could and the main reason they did was because appliances were an ideal channel for pushing profitable finance plans and extended warranties.

Often the store and sales assistant made more money out of the “interest free 72 months” deal, the three year warranty and the connector cables than they did from selling a top end laptop or plasma TV.

Now the easy credit era is over, those add-ons aren’t so profitable and with Amazon leading an army of e-commerce retailers changing customer expectations, those businesses locked into Big Box, easy credit way of doing things have to rethink how and what they are selling.

Harvey Norman’s founder Gerry Harvey said recently that people would still buy big items from his store. The reality is they are moving across to sites like Winning Appliances where they can choose the items, have them delivered installed and the old appliance taken off, a godsend when you’re dealing with a 50Kg washing machine or fridge.

Apple’s success shows retail does have a future. It just doesn’t lie in the low service, Big Box model that grew out of the easy credit and cheap energy economy of the late twentieth Century.

Do we really want fibre broadband?

Poor takeups in Tasmania and Kansas City raise the question of whether consumers want fast broadband

Despite the enthusiasm to be the first US city to have the high speed broadband offered by Google Fiber, it turns out interest in the Kansas City rollout is only running at half the rate expected.

This is consistent with the Australian NBN experience, with the takeup rate so far a dismal with less than 20% of Tasmanian properties passed taking the opportunity to get connected – only 10% of accessible premises are projected to sign up in 2012 according to NBNCo’s corporate plan.

Both the poor take up rates in the US and Australia raise the question “do we really want fibre broadband?”

The main difficulty are the incumbent players. In Kansas City reports are that Time Warner, the incumbent cable operator, is offering deals to lock their customers into existing plans.

A similar thing has happened in Australia with the major operators locking customers into existing ADSL and phone plans so subscribers face penalties if they churn across to an NBN service.

Most of those subscribers don’t need to churn right now, for most users the data plans they are currently on are fine and the NBN prices aren’t substantially different to the existing ADSL charges. In Kansas City, Google’s prices are lower, but the service is some way off and Time Warner can offer a connection now.

Another problem is demographics, neither Tasmania or Kansas City are major digital industry hubs and parts of both regions are economically distressed, which means they are less likely to take up the offer – or be able to make the investment – to get get connected.

That latter problem is the most concerning, as regional disadvantaged areas have the most to gain from being connected to broadband.

Just as towns lobbied in the 19th Century to get railways routed through their communities, in the 21st Century fast Internet connectivity is seen as essential to a region’s development.

But if individuals won’t get connected then it makes the business case for setting these networks up difficult to justify for corporations like Google or Governments like Australia. In future, it will make it harder to get incumbent network operators to replace aging copper infrastructure with modern and faster fibre.

As both projects mature, hopefully we’ll see a greater takeup, in the Australian case greater acceptance should be inevitable as the incumbent Telstra copper network is shut down and subscribers migrated across to NBN infrastructure.

The question does remain though of just how useful homes and businesses see fibre Internet connections to their homes, if they remain unconvinced about the value of a high speed data link then it maybe our communities miss out on the vital communications tool of the 21st Century.

Short sharp shocks

China’s changes will catch us by surprise regardless of whether they are good or bad.

In Atlantic Magazine’s China’s long history of defying the doomsayers, Stephen Platt and Jeffrey Wasserstrom put the case that the Chinese Communist Party is unlikely to fall in our lifetimes.

China’s military is presently powerful enough and its diplomacy stable enough that the Communist Party faces no realistic threats from outside. Internally, its control over society is effective enough that, while unrest and discontent may be widespread, there are neither well-organized opposition parties nor rebellious armies that might seriously challenge the central government.

They are probably right, it’s difficult to see any immediate threat to the power of China’s current leaders.

Although we should keep in mind that only a few decades ago it was inconceivable that the Soviet Union would disintegrate or the Warsaw Pact dissolve.

Had someone wrote in 1986 that within five years both would happen, they would have been written off as being foolish. But that’s what happened.

In the stock market it’s said “the market can stay irrational longer than you can stay solvent” and it’s true for any pundit – you may be right that property is overvalued, the US is in decline or the Eurozone will break up, but the powers that be will may be able to kick the can down the road and sustain the unsustainable for a lot longer than any of us expect.

Steve Keen found this with the ‘walking to Kosciusko” bet where he was railroaded into giving a fixed date of when the Australian property market would fall. He, nor anyone he made the wager with, had any idea of the billions of dollars governments would throw at the market to maintain prices.

All too often people make the right calls about property markets, economies or the fall of regimes but get their timing wrong.

In his book The Sun Always Rises Ernest Hemmingway’s character Mike Campbell describes how he went bankrupt – “Two ways. Gradually, then suddenly.”

And so it is with empires, nations, ideologies and even the most powerful corporation. When the change happens it’s sudden and unexpected.

Owning the customer

Is it possible to own the customer?

During the tech boom of the late 1990s the early wave of web developers had a business model that required locking customers into a relationship.

Having spent thousands of dollars for designing and building a website, a business then found they would have to spend hundreds of dollars every time they wanted to make even a minor change.

While that model didn’t work out for web designers as new tools appeared that made it easy for customers to look after their own sites, it’s still the ambition of many businesses to ‘own’ as much of the customer as possible.

Department store credit cards, supermarket petrol cards and airline frequent flier programs are all examples of how big businesses try to lock their customers into their ecosystem.

Possibly the dumbest, and most counterproductive all, are the media companies with policies of not linking outside their own websites. The idea is to keep readers on their sites but in reality it damages their own credibility and betrays their lack of understanding how the web works.

The airlines too have discovered the risks in trying to ‘own’ their customers as their devaluing frequent flier programs has irritated and disillusioned their most loyal clients.

Many businesses, particularly banks and telcos, try to tie you up into knots of contractual obligations with reams of terms and conditions. All of this is an attempt to make the customer a slave to their business.

Outside of having a legally protected monopoly, you can’t ‘own’ a customer – the customer has to grant the favour of doing business with them.

They’ll only do business with you if they trust that you’ll do the right thing by your promises; whether it’s delivering the cheapest product, the best service or quickest delivery. The moment their trust begins to slip, you risk losing their business.

Executives who talk of the concept of owning the customer are either working in organisations with little competition or those steeped in 1980s management practices. If you hear them talking like that, it might be best to take your business, and investments, elsewhere.

Owning customers didn’t work for the web designers of the early 2000s and it won’t work for businesses in other sectors. The only way to ensure most of your clients keep coming back is to deliver on what you’ve promised them.

Google announces eTown awards for Australian towns

How prepared are communities for the digital economy?

I don’t normally post media releases onto the site, but it appears there’s no posting of the Google eTowns announcement. As I’m writing a story for Technology Spectator on it, here’s the release.

One thing that leaps out when reading the media reports on this is how many outlets just copy and paste. Only the Fairfax entertainment reporter went to the effort of rewriting the release and adding some additional context. You have to wonder how long ‘churnalism’ can survive given readers are onto this laziness.

 

EMBARGOED UNTIL THURSDAY 30th AUGUST, 4:30PM (EST)

 

Perth wins top spot in Google’s eTown Awards

Western Australia capital beats out eastern states as centre of digital boom

Perth leads the list of Australia’s top 10 eTowns, Google announced today. This new Google award recognises and ranks those communities which are outpacing the rest of the country in having its small businesses use the web to connect with customers and grow.

The web is transforming all businesses in Australia, not just those typically considered to be “Internet businesses”. The digital economy is already worth as much as Australia’s iron ore exports, according to Deloitte Access Economics, and it’s forecast to grow by $20 billion to $70 billion by 2016.

To provide a snapshot of this vital economic activity, Google looked at more than 600 local government areas to analyse which communities are contributing the most to the digital economy. The top 5 metropolitan and top 5 regional eTowns for 2012 are:

Metropolitan

  1. City of Perth, WA
  2. City of Yarra, VIC
  3. City of Adelaide, SA
  4. North Sydney, NSW
  5. Ryde, NSW
 Regional

  1. Byron Shire, NSW
  2. Meander Valley, TAS
  3. Cessnock, NSW
  4. Wingecarribee Shire, NSW
  5. Scenic Rim Regional Council, QLD

Federal Small Business Minister Brendan O’Connor, who is launching the inaugural eTown Awards at an event in West Perth today, said;

“The digital economy is fuelling Australia’s economic growth and it’s important businesses of every size are well equipped to take advantage of the potential.  I hope this award encourages other small businesses to get online to connect with people who are actively looking for their products and services.”

Perth’s Lord Mayor Lisa Scaffidi said, “Perth may be known for its mining boom but this award shows that our businesses are actively grabbing hold of the digital boom. The City of Perth is proud of its eTown Award and I am delighted to represent an area whose businesses are so connected with both their local community and the entire world thanks to the web.”

Online advertising is a growing phenomenon and Google, through its online advertising and other services, is in a good position to act as a barometer for the strength of this commercial activity – particularly in small businesses. To come up with the eTown Awards list, Google analysed data on the number of local businesses in each local government area which are advertising with Google AdWords and/or have created a free website using Google and MYOB’s Getting Aussie Business Online initiative.

Byron Shire, home to the popular holiday destination, leads the regional eTowns list with a high proportion of accommodation, recreational hire and tours providers using the web to drive their businesses.

Claire Hatton, Head of Local Business for Google Australia said, “The eTown Award winners show that anyone anywhere can reap the benefits of the digital economy. These days being on the web is as important as having a phone. Australians expect to be able to seek out products and services online, and local businesses need to be found to compete.”

For more information about the eTown Award winners and for case studies on how local businesses are succeeding online and driving economic growth, visit www.google.com.au/ads/stories [NB: website will be available after embargo lifts].

Media are invited to attend the announcement of the eTown Awards with the Minister for Small Business, Perth’s Lord Mayor and Google Australia.

Local businesses located in each eTown may be available for interviews.

Thursday, 30th August at 2:00pm – 3:00pm
The Yoga Space
Shop 11, Seasons Arcade,
1251 Hay Street, West Perth.

To RSVP to the event or for interviews please contact:

Redacted

Notes to Editors

  1. AdWords is Google’s online advertising system which enables businesses of all sizes to advertise relevant text ads next to Google search results. Businesses decide the text and their budget and only get charged when someone clicks on their ad.
  2. The Google eTown award top ten list was created by comparing the number of small and medium sized enterprises that used AdWords in each local government area and/or have created a website using Google/MYOB’s Getting Aussie Business Online. The results have been normalised for the relative population of each LGA.

Mosquitoes of the Internet

Stupid people have rights too and the Internet allows them to exercise those rights.

Sydney Morning Herald urban affairs columinst Elizabeth Farrelly recently fell foul of one the big fish that inhabits the shallow, stagnant intellectual pond that passes for Australia’s right wing intelligentsia.

As a result, Elizabeth found her personal blog infested with insulting comments from the Big Fish’s Internet followers.

What focused their ire was Elizabeth complaining about a delivery truck parked across a bike lane. A bit like this genius.

The funny thing with the righteous defence of the poor truck driver’s rights to privacy and blocking cycleways is where it the driveways to the gated communities for self-righteous and entitled self retirees that these commenters inhabit were blocked in a same way many of them would be reaching for the blood pressure pills.

One of the great things about the Internet is that it allows all of us to have our say without going through the gatekeepers of the newspaper letters editor or talkback radio producer.

The down side with this is that it gives everyone a voice, including the selfish and stupid – the useful idiots so adored by history’s demagogues.

Luckily today’s Australian demagogues aren’t too scary and the armies of useful idiots they can summon are more likely to rattle their zimmer frames than throwing Molotov cocktails or burning the shops of religious minorities.

Most of these people posting anonymous, spiteful and nasty comments are really just cowards. In previous times their ranting and bullying would be confined to their family or the local pub but today they have a global stage to spout their spite.

These people are the irritating mosquitoes of the web and they are the cost of having a free and vibrant online society.

It’s difficult to have a system where only nice people with reasonable views that we agree with can post online. All we can do is ignore the noisy idiot element as the irritations they are.

This is a problem too for businesses as these ratbags can post silly and offensive comments not just on your website but also on Facebook pages, web forums and other online channels.

Recently we’ve had a lot of talk about Internet trolls, notable in the discussion is how the mainstream media has missed the point of trolling – it’s about getting a reaction from the target. In that respect The Big Fish and his army of eager web monkeys have succeeded.

The good thing for Elizabeth is her page views will have gone through the roof. That’s the good side of having the web’s lunatic fringe descend upon your site.

Empathy and the genius salesman

Apple’s Genius training manual shows the importance of empathy and investing in staff.

One of Apple’s great successes has been in delivering services through its stores. Tech site Gizmodo managed to get a peak at Apple’s training manual for their in-store ‘Genius’ technicians.

A word that keeps popping up in the manual is ’empathy’ – as Gizmodo says;

The term “empathy” is repeated ad nauseum in the Genius manual. It is the salesman sine qua non at the Apple Store, encouraging Geniuses to “walk a mile in someone else’s shoes,”

While the Gizmodo writers and many of the site’s readers seem surprised or cynical about this, it’s not surprising for anyone who’s worked in sales or tech support, and the Apple Store Geniuses are doing both.

Empathizing with the customer or caller gives them confidence and builds trust. For someone in sales, listening and emphasizing is how one finds out what the customer really want. On the support desk, putting yourself in the customer’s position makes it easier to diagnose the problem.

That empathy a real return on investment – US Apple Stores earn 17 times more per square foot than the average retail store. The next most profitable retailer is Tiffany & Co who only boast have the revenue.

What Apple again show is that training matters. Every surly computer store assistant, every grumpy flight attendant or bored call centre worker can, with the right training and incentives, be just as effective as an Apple Store genius.

Sadly too many businesses, particularly retailers, see training as a cost and their employees as naughty children. Those businesses have a serious problem.

Without empathy – the ability to put yourself in your customers’ shoes – your business is working with a distinct disadvantage.